BTN's Parent Moves To Centralized European Res. Center
<B> BTN's Parent Moves To Centralized European Res. Center</B>
By Amon Cohen
Global media giant United News & Media has started routing telephone reservations from four European countries to a Rosenbluth International call center deep in the Irish countryside.
Since March, the Rosenbluth "Intellicenter" near Killarney, in County Kerry, has been handling calls in English, French and German from United Media employees in Denmark, Germany, the Netherlands and Switzerland. The efficiencies gained by consolidating bookings through a single reservation center are expected to help the company increase the savings it has realized since consolidating its global travel management with Rosenbluth in December 1997. United Media slashed $1 million from its annual $20 million travel tab in the first year of the relationship and is on target to save $1.5 million this year.
The Killarney Intellicenter also handles international calls from such customers as Caterpillar, Nike and SITA. When travelers phone in their trip requests, Killarney completes the transaction and queues it to the Rosenbluth office nearest to the traveler, which in turn issues and delivers the tickets.
Despite involving two offices in each transaction, Rosenbluth found it more cost efficient to route reservations through a single pan-European call center. Those efficiencies will be even greater once e-ticketing becomes ubiquitous and local offices can be avoided.
In the search for low-cost booking options, United Media also has signed up for Rosenbluth's @Rosenbluth self-service reservation system, and expects to begin trials in the next year.
"There will eventually be a three-tier service," said Dr. Ted Townsend, London-based CEO of United Media Group Services, the central operating company for the dozens of individual businesses that make up the United group. "The electronic system will be used for repeat bookings where travelers simply have to change the date; the Intellicenter will be used for bookings that are straightforward but require some degree of personal intervention; and local Rosenbluth consultants will be used for special services."
Belgium, Sweden and some of the United Kingdom, which now are being serviced by national offices, eventually will move to Killarney. Tickets for all 40 U.K. locations currently are handled from a single office in London, and that business is large enough to justify continuing local service. Similarly, all reservations for 31 locations in the United States are handled by a Rosenbluth office in Houston.
The segmentation of the reservation service will help Townsend achieve one of his two professional objectives: reducing unit costs for United Media. The other is adding value for the group and its employees. United Media Group Services is responsible for facilities management and group purchasing within United News & Media, whose businesses include PR Newswire, three British television companies, Express Newspapers, United Advertising Publications and Miller Freeman, the company that owns Business Travel News.
Since it would be inappropriate to centralize purchasing or other functions in a group as diverse as United, Townsend said, he is a keen disciple of outsourcing and sees his overriding task as one of supplier management.
Given United Media's decentralized structure, his biggest challenge has been how to realize the benefits of consolidated purchasing when profit and loss responsibility is devolved to numerous operating businesses. This dilemma partly explains why United Newspapers and MAI, which merged to form United News & Media, never attempted global travel management before.
"We took the view that our combined purchasing power must be worth a lot in terms of cost savings," Townsend said. "There wasn't a strong ethos of doing things centrally in either United Newspaper or MAI, and we went ahead with the program only after realizing that travel is a non-core function that we could outsource without getting in the way of line responsibility."
United chose Rosenbluth in a three-month selection process that did not even include a formal request for proposals. "We couldn't go out to bid because we did not have any information to give," Townsend said. The company had little idea how much it was spending on travel or even how many travel agencies it was using, though it believed the number to be in excess of 50.
Indeed, the need for reliable travel spending data was the reason the group issued a strict mandate to book through Rosenbluth once it had been chosen. "The word from the very top of the company was that if it's not booked through Rosenbluth, you won't get your money back," Townsend said. "We explained that we had to determine what we spent in order to negotiate deals with suppliers. Beneath that, we were far less heavy-handed about the rest of our policy, such as class of travel."
As is almost inevitable in global consolidations, there was resistance from a small number of subsidiary companies to end long-standing relationships with agencies that had served them well. Townsend tackled this problem by visiting virtually every location worldwide to explain the benefits to be gained.
Townsend worked hard to secure local buy-in for the hotel program rather than imposing a solution from on high. "We asked the local operating companies which were the best hotels in the area in terms of location and suitability for United personnel," he said. "We then gave them the global information and, in many cases, they went and did the deals locally."
It was to keep things simple that United initially remunerated Rosenbluth by letting it keep all commissions and overrides in return for a full reservations and ticketing service, account management, global representation and supplier negotiations. "We didn't want to be sending agency fee charges out to the individual companies and cost centers," Townsend said. "The administrative burden of fee charging or, even worse, retrospective charging, would have played havoc with everyone's profit and loss accounts. So we decided to give the full commission to Rosenbluth. This meant that each transaction paid its way at the time and there were no reallocations or accounting adjustments later."
In 1999, however, the decline of airline commissions has made this revenue stream insufficient to compensate the agency, and United Media is joining the great tide of companies moving to transaction fees. Under this model, each cost center knows exactly how much each transaction is going to cost in advance.
The same philosophy extends to supplier negotiations, where United and Rosenbluth have negotiated upfront deals almost exclusively. United has bilateral U.S.-U.K. agreements with United Airlines and Virgin Atlantic, and U.S. domestic and outbound deals with Delta Air Lines. British Airways has a contract in Europe but, like many before him, Townsend found it difficult to achieve a reasonable dialogue with BA for transatlantic traffic. The U.K. flag carrier only won some European business after its U.S.-U.K. market share plummeted.
"BA has been actively deselected for long haul," Townsend said. "We have managed to move market share significantly in favor of everyone we have done business with."
United's hotel business also has been consolidated in a three-tier program. At the bottom are the standard Rosenbluth discounts; in the middle are deals with seven global chains that account for 47 percent of the company's business. At the apex is United's Top Towns program, offering deep discounts at 105 hotels in 56 cities where the group uses more than 50 room nights a year.
Townsend hopes to aid the process by distributing travel data over the company intranet and to evolve and refine the relationship with Rosenbluth. He said the partnership is working particularly well now that Rosenbluth has given the account its own "managing director," with a high degree of autonomy and management expertise. Next, he wants to consolidate the transaction fee system into a global fee structure, expressed in dollars in the United States and euros in Europe.
He also would like Rosenbluth to start serving the few isolated pockets of United operations in countries where the travel management company does not have representation. "At first, I wanted 100 percent consolidation because I was worried about the fraying of the carpet in terms of gathering management information. But now it is because I want the demonstrable benefits to be available to everyone," Townsend said.